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Introductory seminar
October 2009
Introducing the
RICS New Rules of Measurement
Order of cost estimating and elemental cost planning
Michael Byng
Subject matter
Existing standards.
Findings.
Recommendations.
Why change?
Benefits.
Questions?
Estimating
Existing standards
(1)
Since 1922, the Standard Method of Measurement (SMM) has provided quantity
surveyors with rules of measurement for quantifying building works.
Existing standards
(2)
Findings
(1)
Findings
(2)
Whats more:
Estimating;
Procurement; and
Validation.
Recommendations
Based on UK practice.
BUT
Current Status
Why change?
Overview
Purpose:
Uses:
Cost planning.
Areas;
Element unit quantities (EUQ); and
Elements, sub-elements, components.
Key points
(1)
Re-structured elemental
breakdown for cost planning.
Defines:
Building works.
Risk.
Inflation.
Key points
(2)
Describes:
Measurement:
Key points
(3)
Other advice:
VAT Assessment.
1.
Works estimate;
2.
3.
4.
5.
Inflation estimate.
Main Contractors
Preliminaries
Main Contractors
Overheads and Profit
Preliminaries:
Subcontractors preliminaries to be
included in the unit rates applied to
building works.
Risks (1)
Risk allowance:
The amount added to the base cost estimate for items that cannot be precisely predicted to arrive at the
cost limit.
Properly considered assessment of the cost of dealing with risk should they occur.
Construction risks.
Construction Risks
Inflation estimate
Inflation Estimate
Tender Inflation/Deflation
Construction Inflation/Deflation
Ref
Item
1
2
3
Building Works
Main Contractor Preliminaries
Main Contractor Overheads and Profit
Works Cost Estimate
4
5
Risk Allowances:
Design Development Risk
Construction Risks
Employer Change Risks
Employer Other Risks
Inflation:
Tender Inflation
Construction Inflation
Group Element
1
2
3
4
5
6
7
8
9
Substructure
Superstructure
Internal Finishes
Fittings, Furnishings and Equipment
Services
Completed Buildings and Building Units
Work to Existing Buildings
External Works
Facilitating Works
12
13
14
Risk Allowances:
Design Development Risk
Construction Risks
Employer Change Risks
Employer Other Risks
Inflation:
Tender Inflation
Construction Inflation
Quantification methods:
Floor area;
Functional unit; and
Elemental.
Rules for measuring EUQs can be used for analysing historical cost data.
Thereby completing cost management cycle.
Cost plans
Group element.
Element.
Sub-element.
Component.
Codified framework:
Building works
(1)
Building works
(2)
Benefits
(1)
Approach:
Provide a comprehensive work breakdown structure (WBS) and a cost break down structure
(CBS) for cost estimates and cost plans.
Benefits
(2)
Measurement:
Modern construction:
Deal with modern construction products and methods, including modular units and complete
buildings; and
Benefits
Preliminaries:
(3)
Risk management:
Inflation:
Benefits
(4)
Cost management:
Promotes budget setting using a cost limit, which includes allowances for risk;
Provide advice on how to deal with VAT, taxation allowances, taxation relief and grants.
Accuracy of estimates:
Define the information required by cost manager to produce cost estimates and cost plans at
each formal estimating stage; and
Benefits
Innovative:
(5)
Deal with the total cost of delivering a building project (total cost management).
Benefits
Procurement:
Provide a method for codifying elemental cost plans so that they can be converted to works packages for
procurement; and
Provide robust basis for capturing historical cost data in the form required for future cost estimates and cost
plans.
Usability:
(6)
BCIS Challenge
How is the BCIS going to address the need for cost data to
be provided in a form that can be readily used for cost
estimates and cost plans produced using the RICS NRM
Order of cost estimating and elemental cost planning?